recognized built-in loss
(4) Recognized built-in losses The term “recognized built-in loss” means any loss recognized during the recognition period on the disposition of any asset to the extent that the S corporation establishes that— (A) such asset was held by the S corporation as of the beginning of the 1st taxable year referred to in paragraph (3), and (B) such loss does not exceed the excess of— (i) the adjusted basis of such asset as of the beginning of such 1st taxable year, over (ii) the fair market value of such asset as of such time.